Outrageous cost of "assignment"
So I sold a covered call on RY in my scotiaitrade account and they gouged me with $65 in fees when the call got assigned... What is up with that?
Here's what I did (in my TFSA):
Bought 100 shares in Nov for $4533... Then sold an Apr call at 54 for $1.25 (in Jan) (received 113.76 in premium)... it was assigned last week... and they put $5345.01 in cash into my account... Which means they took $11.24 + $64.99 = $76.23 for doing almost nothing... basically moving electrons around... I only got $113.76 - $76.23 = $42.53 (plus the increase in value of the stock)...
When it was "eTrade" assignments were a lot cheaper and cash balances earned some interest... I'm seriously thinking of switching brokers...
I'm thinking scotia bank is loving me right now.
Does anyone know if there is a cheaper way of doing this?
(I suppose I should start by trading more contracts at a time).
I have had so much shit with Scotia bank that I can only advise you to RUN! They might be the bank for you when you are a billionaire.
I'll call their costumer service on Monday to confirm this. If this is true, time for me to switch as well.
Yep... I just called them!
Me: "So, I have to put up with it, or move my money somewhere else?"...
Him: "Yes, sir! Is there anything else I can help you with today?"
What's factored into the $76.23?
I am guessing two commissions of $19.99 for buying and selling stock one for getting rid of the option and... forex?
This sounds like a classic buyout your competitors and then jack up the price (in the wake of past 5 years of broker buyout).
In any case, a good time for me to start exploring other brokers.
I think they made a mistake somewhere in the assigment cost
Before, it was the cost of a telephone order, but a few months ago that cost came down
I was assigned 1.000 shares with TDW...cost 43,00$
I was assigned 500 shares with ITrade...cost 43,00$
The cost of the options seems OK
9,95 basic plus 1,25/option
1 option = 11,25$ = 11¢/share
Me, 5 options = 16,25 = 3½¢/ share
Me 10 options = 22,25 = 2¼¢/share
Someone complaint about the cash not giving interest
If you open a «CASH OPTIMISER ACCOUNT» it will give you SOME interest....just move the cash from margin account to cash optimiser...back and forth...at NO COST
I do not DEFEND or represent ITrade...on the contrary....with the changes they made I find it lamentable
They have a long way to go to match TDW on clarity and conviviability,plus their marketing announcement when you open your account
Nothing of this on TDW...only business related to your account
Hope a call will straighten this out....65$ makes no sense for 100 shares assigment
The only things that can be factored in...veryfiable with the orders executions they better be on hand when contacting customers service
Originally Posted by Causalien
1) Buy 100 shares....9,95
2) Sell 1 option...11,25
3) Assigment of 100 shares....43,00
Nothing else, when an option is exercised...it évaporates from the account AT NO COST
I am really appalled at what you guys are paying to deal with options on the Canadian side. Seems more and more like a nightmare to me.
these are all separate transactions:
1) bought 100 ry in nov/11
2) sold 1 april 54 call in jan/12
3) option was exercised & stk was assigned in april/12
each transaction should & would have its own separate commission.
investor might be considering the total return in his own mind, but he should understand that what he has actually done is a series of separate transactions.
the commission for the final exercise transaction appears to be 54.99 (100 shares @ 54 = 5400.00 less cash rec'd 5345.01 is 54.99)
a 54.99 commission for a 100-share assignment does seem too high. Perhaps the OP might inquire again with a different representative. The standard formula for exercise would be the agent-handled commission for the stock assignment transaction, subject to a minimum assignment fee.
however, different brokers have vastly different assignment commissions. All option traders should learn in advance what these commissions are going to be.
BMO investorline, for example, has high assignment commissions. From this thread, it appears that scotia itrade may have as well.
td waterhouse, as noted upthread, charges a flat fee of $43 per assignment, no matter how many shares are involved.
of course, IB clients have it best of all. There is said to be no assignment fee or exercise commission whatsoever at IB.
the other issue is why this OP let things get so far along without doing anything to rescue his RY shares by preventing assignment. RY is a hi-quality dividend-paying stock, so for a short call seller it's a holder & a keeper, not a quick trade candidate.
the OP knew from the get-go in january, when he sold his call, that the counterparty would call away his 100 shares if the price of RY on the 3rd friday in april was higher than $54. Apart from monitoring his RY position constantly, the time to have acted was back in late march or early april, during a day of sharply falling RY share prices.
there's a useful lesson for option newcomers here.
I think Humble Pie has it right. I'm also with iTrade, assignment fees are $45. They also charge you a trading commission when assigned.
$45 assignment + $9.99 trading commission = $54.99